Vertical Tax Externalities in the Theory of Fiscal Federalism

December 1, 1997

Preview Citation

Format: Chicago

Michael Keen. Vertical Tax Externalities in the Theory of Fiscal Federalism, (USA: International Monetary Fund, 1997) accessed December 25, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Vertical tax externalities between levels of government can occur in federal structures, with responses to the tax policies of one level of government affecting the tax base of the other. Such effects mostly arise when federal and state governments co-occupy the same tax base. This paper examines these externalities by considering their implications for a range of issues in fiscal federalism: the relationship between state and federal tax rates, the equilibrium levels of these taxes, the relevance of experience in federal countries for policy design in international settings, intergovernmental grants, and the assignment of tax powers among levels of government.

Subject: Expenditure, Fiscal federalism, Fiscal policy, Rent tax, Revenue administration, Subnational tax, Taxes

Keywords: Equilibrium state tax, Federal government, Federal-state interaction, Fiscal federalism, Gas excise, North America, Public goods, Rent tax, State tax rate, Subnational tax, Taxes gasoline, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/173
Stock No:

WPIEA1731997
ISBN:

9781451977318
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 45, No. 3, September 1998.

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